What Is Backing Your Deposits in the Bank?

By Elliott Wave International

Is the bank really the safest place to keep your money? Robert
Prechter joins the Mind of Money host Douglass Lodmell to discuss
what backs bank deposits and how you can keep your hard-earned
money safe.

This
article was syndicated by Elliott Wave International and
was originally published under the headline What Is Backing Your Deposits in the Bank?.
EWI is the world's largest market forecasting firm. Its staff
of full-time analysts led by Chartered Market Technician
Robert Prechter provides 24-hour-a-day market analysis to
institutional and private investors around the world.

is that the dollar won't be in danger of losing much more value until after the tremendous debt liquidation has run its course.
As of now the banks don't even have enough of those so-called "worthless" US dollars backing deposits. He recommends people have cash on hand in the event of a banking crisis where ATMs could be emptied and depositors wont have access to funds in their accounts. Just common sense advice really.

SPENT. Buy food, supplies, protective gear, and other commodities that you USE. Keeping money in banks is going to bite you one day. Keeping stacks of cash around leaves you vulnerable to being wiped out by a thief. Having heirloom seeds, sacks of rice and beans, things like that do not tempt theives, and what is it you need money for? To buy food and stuff. Well, just buy the food and stuff, and minimize your exposure to bank fraud, runs, or food supply disruptions.

... all dollar denominated paper assets will drop in value. There will be no safe banks. They will all be zombies. It is just a matter of the degree of zombification.

There are favored banks. Systemically Important Financial Institutions will survive the carnage. The Treasury Department gets to decide which ones are systemically important. My guess is Goldman Sachs, JP Morgan Chase, and Citibank will be at the top of the list.

Under rules in force TODAY at Citibank they can take up to 7 days to give you cash from your checking account. There is nothing stopping them from deciding to take 14 days, 21 days, or 6 months. So even if your cash is in a favored bank, by the time you get it, it will be worth considerably less. So M0 means nothing.

What makes holding M0 better than M1, M2, or M3? It's all the same to me. Paper and tokens are minutely better than electronically stored zeros and ones. I'll take the real thing, s&g (heck, tulips are more valuable than paper and tokens). What Mr. Prechter never accounts for is government's incessant need to increasingly find new debt(complex derivatives now, including re-hypothecation, which simply double, triple, dodotuple collateralize underlying collateral assets) to keep the ponzi alive. They cannot stop adding debt, and when debt can be added by simply typing 1,000,000,000,000 into a computer, unlike the old fashion need to actually print, what would give them the incentive to stop? Furthermore, history tells us they won't stop. The loss of confidence in fiat will determine the end of it and the scramble to hard assets. The loss of confidence of the USD as the world reserve could come sooner which would mean an instant devaluation. I would not want MO in either case, except in the amount of any outstanding dollar-demoninated debt I may have.

if not all of the DP listeners would simultaneously agree that absolutely nothing is backing our currency. The last year was 1971 under Richard Nixon which we finally went off the final remnants of the gold standard. The beginning of the end of Sound Money, of Sound Currency. The true beginning began in 1933 when FDR seized Every American's gold, silver, etc. as well as other precious metals under the confines of The "Patriotic" thing to do. He stole a significant part of Americas wealth/assets. He utilized modern day Executive Orders. In the same year, he initiated the Trading with the Enemies Act. And again in 1938, he initiated the Administrative Procedures Act. One of the greatest Presidents in history. I don't think so, he was just another tool for the wealthy Industrialists who needed favors. President FDR was more than willing to oblige. That sad cliff note, nothing has changed since the days of FDR and if anything, things have actualy gotten worse. I fear for our near term future.

But he doesn't say if it was the executive order sending Japanese Americans to concentration camps, the confiscation of gold, or the attempt to pack the Supreme Court with additional justices that earned Newt's undying admiration.